Judgment against Company Director

makooy

Registered User
Messages
16
Hi folks,

my wife(really) is a company director of a family business, it’s her dad’s company and she is the second director. The company is insolvent, hasn’t been trading for the past year and now she has a judgement against her for unpaid rates, 50k

how will this affect her personally? Will it affect her credit rating for a mortgage? Thanks
 

The Horseman

Frequent Poster
Messages
313
A judgment can be enforced against any assets your wife owns to discharge the debt.

I would expect it would be a red flag for any mortgage application.
 

makooy

Registered User
Messages
16
I found out the judgement was made against the company name ABC Limited, no mention of my wife on the judgement itself.
 

audioflaps

Registered User
Messages
27
Isn't the whole point of a limited company that it has limited liability, so the liability stops with the company?

Or is it because when the company is insolvent, then limitated liability disappears?
 

dublin67

Frequent Poster
Messages
292
My understanding is that it requires a court to state that a director is personally liable for the debts of a company - this is probably the High Court and occurs when the company is put into liquidation. Breaching the corporate veil, as the lingo goes, and making a director personally liable for company is a fairly rare event to the best of my knowledge and reckless trading is required to be shown. I would stress that I'm not a solicitor and this is merely my understanding.
 

The Horseman

Frequent Poster
Messages
313
If a judgement was made against the company then the debt has "died" with the company. if your wife gave a personal guarantee towards the debts of the company then she can be held personally liable for the outstanding debts.

A creditor/shareholder must prove a Director acted Fraudulently in his role if a Director is to be held personally liable for the debts of a company (where no personal guarantee exists). Proving a director acted fraudulently is very difficult to prove in the courts.
 

peemac

Frequent Poster
Messages
694
No affect on her personally but maybe get her to suggest that the company is liquidated.

She could also resign as a director?
 
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